The Economic Analysis About Contract Breach

There is a tendency of trying to adopt mathematics tool and nature scientific method in social science field all along in order to achieve the scientific quality of social science. Up to now, economics is the most successful model. It has gained the superiority and begun to expand to the other social science. Legal economic analysis is the result of outstretch. Whereas law research is completely different from economics research whether in methodology or on technique basis. This paper will take an attempt to comprehend the economic method exercising in law research by analyzing the question of contact breach.Once a contract is broken by both parties who signed the contract, it will not achieve the goal of the contract which necessarily leads to a cost increase. How to reduce the cost and have the biggest benefit for all the parties who offer a contract broken are not only a problem of economic but also a problem of law. Basing on the cost analysis of the contract breach, this paper analyzes the forms of the contract breach compensation, calculations of the damage compensation, and the valid contract breach by using the analysis method of microeconomics. This is a preliminary research regarding the benefits analysis complemented by laws. What the paper research includes several aspects. Firstly, introducing the theory of legal economics. Secondly, analyzing how to assume the liability of contract breach in economic angle. Then, analyzing the duty of contract breach specially and bringing forward economics channels to reduce the phenomenon of contract breach. Lastly, eliciting some correlation conclusion. Therein affirming the validcontract and analyzing the possibility of adding punishment article in the contract Law. This is a preliminary research regarding the duty of contract breach in our country keeping up with international standard.The paper wishes to give a guidance to design the duty of contract breach practically, to provide a new thinking way for court when judging disputes of contract, to collocate the social scarce resource reasonably and to set up a rational anticipated system for the reform of economy system in the condition of socialism market economy.